There comes a time for most San Diego couples when they get sick of renting and, for the Whites, it came around the 40th birthday mark.
Shawna White, 40, spent countless hours researching a place she and her husband Nathan, 39, could afford that wouldn't break the bank. In addition to getting away from the region's explosive rent hikes, they saw a home as an investment.
Eventually, the Navy couple landed in Otay Ranch on the eastern fringes of the county near the border with Mexico. They bought a new 1,504-square-foot townhouse for $378,000, around $200,000 less than what something similar would have cost them closer to downtown.
"We were able to buy something new instead of an older home with issues," she said. "This was a good buy."
More and more new homeowners are being drawn to Otay Ranch, the largest residential development in San Diego County history at 25,000 acres. After being hit hard in the housing crisis, it has reemerged as a viable option for homeownership in a county where historic low inventory has driven prices to new peaks.
The median home price for a newly built home or condo in the county was $787,000 in June, at least $250,000 more than what a new place in the ranch goes for. Real estate tracker CoreLogic said the median for a resale single-family home was $595,000 in June, meaning you could get a new house in Otay Ranch for less than an old one in some cases.
There are reasons why some potential buyers might not like Otay Ranch — proximity to the border and three jails, commute time and higher taxes in some cases. But, the numbers show it isn't stopping buyers.
"It's the next to last place where they can build moderate priced housing," said Alan Nevin, industry analyst at Xpera Group. "The big action for single-family (homes), townhouses and apartments is Otay Ranch."
As of the first six months of this year, single-family homes in the ZIP codes that encompass the ranch were selling in roughly 30 days and condos/townhouses in 23 days, said the Greater San Diego Association of Realtors.
It is not as cheap as Riverside County — still a huge draw for San Diego workers — but the commute from Otay Ranch to downtown is about 25 to 35 minutes depending on traffic. A drive to downtown from Riverside's housing hub of Temecula averages about an hour to an hour and a half.
Today, part of the development crackles with activity as parents pick up students from school and new homebuyers move in. A few blocks away, construction is under way on homes that will soon fill up the quiet, open spaces of this massive development. Despite several home designs, a Spanish style dominates most streets creating a uniform look, making it easy to get lost a block away from a house you are visiting.
Mountains surround the ranch and strong breezes are commonplace. Many roads in Otay Ranch have yet to make their way onto digital mapping applications or GPS units, and cellphone reception can be spotty in parts.
There have been about 10,000 homes built at Otay Ranch with 17,000 to 18,000 more to come. With an area 12 miles wide from east to west and 8.5 miles north to south, Otay Ranch is nearly the size of San Francisco. It is three miles from the border in some spots.
The ZIP code that includes much of Otay Ranch was one of the hardest hit spots during the housing crash. Homes there hit a median price of $651,500 in October 2005 but dropped to $300,000 by September 2011, CoreLogic said.
In June, the median home price was $505,000, still considerably far from the previous peak in 2005 (which is about $800,000 in today's dollars), but also a reflection of builders' shift to more condos than single-family homes.
Higher taxes in Otay Ranch compared to other places in the county are typical. Most of Otay Ranch falls under a Mello-Roos tax district, where a special tax is levied in addition to property tax to pay for infrastructure. It means a house costing $600,000 in Otay Ranch could run about $1,000 more a year in taxes than a home not in a Mello-Roos district. (The exact Mella-Roos fee could be higher depending on where a person buys in Otay Ranch.)
Otay Ranch is popular enough with new buyers that developers say homes are selling before construction is completed. Many of the builders have established priority waiting lists that give eager buyers the first crack at new homes.
Developer Baldwin & Sons said around 70 percent of its buyers are Asian, primarily of Filipino decent. Military buyers also make a major demographic of new Otay Ranch buyers.
Otay Ranch over time
San Diego County planners began work on the 25,000-acre Otay Ranch in 1984, reviewing options for a mix of residential, commercial and industrial development. The area had been used mostly as ranchland for cattle since the 19th century.
The early plan for the ranch hasn't changed much since the 1980s, despite a recent reduction in retail.
Irvine-based Baldwin Co. bought the property from United Enterprise for $150 million in 1988. It was the largest private land transfer since the days of Mexican land grants and is still the largest single residential development in San Diego County history. A political fight over control between the county and Chula Vista ended up with most of the territory becoming part of the city.
Baldwin eventually sold off parts of the development and is joined by Carlsbad-based HomeFed Corporation and Dallas-based Stratford Land in ownership of the region.
Dana Kuhn, real estate lecturer at San Diego State University, said East Chula Vista had naysayers earlier in its development that questioned if anyone would buy houses out there. He said that once developments were built, the buyers came.
"In a supply constrained market, people have to go where the supply is," he said. "They'll go as far as they need to get that thing they feel they need, in this case it is usually trading square footage over convenience."
East Chula Vista was hit hard by the housing crash, and took a long time to recover. Both ZIP codes that cover Otay Ranch were the worst off in the entire county. By May 2012, the 91915 ZIP code had the most defaults (15.4 per 1,000 homes) and the 91913 ZIP code was second worst (11.6 per 1,000 homes).
Nowadays, Otay Ranch is successful because it offers a mix of homes at different prices that appeal to the first-time buyers, said Nick Lee, vice president of developer Baldwin.
"We want to segment all of our product," he said. "That's why we haven't built all 4,000-square-foot houses. They sell for the most, but you wouldn't be able to sell them all. We've put product at every price point and every square footage range."
In Baldwin's Monte Villa development, a 2,594 to 2,833-square-foot home with four to five beds, a two-car garage and three to four bathrooms ranges from $542,000 to $565,000. For context, a 1,199-square-foot condo in Golden Hill with two bedrooms and two bathrooms at the newly opened Guild on 30th is on the market for $614,900.
There are 10 projects selling in Otay Ranch, with others anticipated to fill out the availability of homes at different price ranges in the coming years.
In the first three months of this year, about 200 new homes sold in Otay Ranch, said Marketpointe Realty Advisors. It might not sound like a lot, but it actually made up roughly 35 percent of all new home sales in San Diego County in that time, according to CoreLogic sales reports.
Stratford's 210-acre Millenia project is one of the more ambitious in the ranch with 3,000 homes (apartments, condos and single-family houses), roughly 3.5 million square feet of office space, retail, hospitality, civic and mixed-use projects, six parks, a library and a school.
At 80 city blocks, the Millenia project marks a more urban style in the development as opposed to the suburban villages making up much of the ranch. It will be completed in 10 to 15 years.
"As we bring more projects on, I see our market share growing," said Guy Asaro, the developer and manager of Millennia. "That's because it is an affordable community in which to live compared with other new home communities across the county."
Additionally, he said Otay Ranch stands out because the infrastructure is new, including schools, shopping centers and roads.
All the new developments are expected to increase traffic delays. Planners had originally considered a trolley line but have decided to go with buses instead. The "rapid transit" buses will follow a 26-mile route between Otay Mesa port of entry and downtown San Diego.
Buses will travel on dedicated lanes with limited stops. Kelly Broughton, Chula Vista's development services director, said the bus system will connect to the Millenia site and Otay Ranch Town Center by 2019.
"It should be a quick ride to the border and a quick ride into downtown," he said.
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New homes for sale in Otay Ranch
Anacapa — Townhouses, $540,900 to $545,900, 2,221 to 2,249 square feet
Aviare — Townhouses, $326,900 to $453,900, 1,098 to 1,928 square feet
Lovina — Townhouses, $410,9000 to $487,900, 1,561 to 2,476 square feet
Monte Villa — Single-family homes, $528,900 to $584,000, 2,594 to 3,016 square feet
Parc Place — Townhouses, $340,900 to $401,000, 1,116 to 1,587 square feet
Signature — Single-family homes, $700,900 to $750,900, 3,344 to 3,605 square feet
Tosara — Townhouses, $394,000 to $451,000, 1,635 to 2,366 square feet
Element — Townhouses, $570,970 to $604,520, 2,157 to 2,248 square feet
Z — Townhouses, $361,000 to $384,000, 1,288 to 1,420 square feet
Escaya — Single-family homes, $565,800 to $747,000, 2,289 to 3,707 square feet